Retiring abroad with savings

bigwheeler_2

My wife and I are in our late 50's and have decided to retire to France. We have no pensions to speak of and will realise about 180K from the sale of our house here which will effectively be our pension. We can't risk investments so were going down the cash ISA and savings account route. One problem seems to be that most savings a/c's insist on UK residence. The second problem is the transferring of £ to euros. Is there a way round this. Should we put our savings into a euro zone a/c. Advice please.

EdInvestor

You would obviously keep some savings in euros, and the French have ISA equivalents:

http://www.french-property.com/newsletter/2006/12/19/savings-accounts

Better interest rates may be available.

They also have another product into which you can put large lump sums which can be invested in shares, funds, etc).It is a PEA (Plan d'Epargne en Actions), sort of the French equivalent of a s&sISA - but can take £90,000 (£180,000 for a couple) with no £7k p.a. restrictions.


Open any UK accounts before you leave, most banks will not close the account when you leave but may need a friend or family member's onshore address for correspondence. The Nationwide Esavings/Flex account also offers their popular no-load debit and credit cards for use at foreign ATMs and can be managed by internet, very useful for expats.

You can also access offshore savings accounts via the offshore branches of UK banks for sterling deposites, but note that these days, interest will be subject to witholding tax for EU residents.

bigwheeler_2

Yes...I've heard of these a/c's but can't see the benefit of 2.75 to 4% net over the best UK savings a/c's (presuming I'm benefitting from 20% tax after allowances for 2 people)...am I missing something?

ManAtHome

You need to watch for currency fluctuations as well - pound has dropped around 5% against the euro since Jan/Feb this year. Worst-case (for you) is if the UK has to drop interest rates whilst the eurozone carries on raising as this will send the pound lower. So you could (eg) be 'gaining' half a percent in interest and losing 2 percent in spending power.

oni_2

i would try to make sure that 180k is enough to retire in France. after all you'll need to buy/ rent a house there and you will need to have a privet health insurance. good luck
:beer:

Cook_County

bigwheeler wrote: »

Yes...I've heard of these a/c's but can't see the benefit of 2.75 to 4% net over the best UK savings a/c's (presuming I'm benefitting from 20% tax after allowances for 2 people)...am I missing something?

Yes - tax and social contributions are generally much higher so tax-free is often a better deal.

Cook_County

oni wrote: »

i would try to make sure that 180k is enough to retire in France. after all you'll need to buy/ rent a house there and you will need to have a privet health insurance. good luck
:beer:

Check Sarkozy's latest views on health insurance to find out if you will be covered anywhere at all because the UK NHS coverage will cease when you leave.

grownup1

Please don't make any irrevocable decisions until you have checked out
- private health insurance (state healthcare not now available to most early retirees in France)
- tax efficient investment (UK tax savings on ISAs will be clawed back via French tax but there are various equivalent tax efficient products in France. Assurance Vie products are relevant to long term savings for retirement). French tax on any investment income will otherwise be significant.

This is a good place to start http://www.frenchentree.com/retiring-to-france/

wombat42_2

Why not try Eastern Europe instead ? Cheap property and cost of living but fantastic natural scenery. Bulgaria for example:
http://www.mybulgaria.info/bulgaria-property-forums.html

EdInvestor

180k will only generate around 10k in income a year.Surely two people who have to pay rent and health insurance will have no hope of living on that?

seven-day-weekend

Some thoughts (based on Spain rather than France but hopefully still relevant):

If you are of State Retirement age you can get an E121 form from the DWP in the UK which covers you for free healthcare.

You can keep an existing ISA and receive interest on it but are not allowed to add to it.

I would recommend most strongly that you do not sell your house and attempt live on the capital. I have seen too many people do this in Spain (with a lower cost of living than France) and they have all run out of money. Maybe wait until you are of State Pension age and rent your UK house out instead of selling it (unless you can afford to buy a house in France outright).

Think of the future; what if one of you becomes frail, or even dies. Would you still wish to stay in France? Would you be able to afford to relocate to the UK? This is another reason why I think it is a good idea not to burn all your boats in the UK.

I'm not trying to spoil your dream, but as an expat of three years experience just pointing out a few things you may not have thought of.

Hope this helps and good luck!